If the internal rate of return is less than the firm's cost of capital, the project should be accepted because capital for the project can be obtained more cheaply than usual.

Question

Quizplus · Accepted Answer

If the internal rate of return is less than the firm's cost of capital, it means that the project is not generating returns high enough to cover the cost of the capital used to finance it. Therefore, accepting the project would lead to a loss for the firm.

If the Internal Rate of Return Is Less Than the Firm's